Exclusive: With a decline in growth, India’s Twitter alternative Koo weighs M&A options

Local language microblogging platform Koo has been having a tough time raising funds as the firm sees a decline in growth in the past year, according to three sources aware of the development. Sources further said the firm might also explore merger and acquisition opportunities.

Koo’s monthly active users reportedly dropped to 3.1 million in April from 3.2 million in March and 3.5 million in February. This is a steep fall from the peak MAU of 9.4 million in July 2022.

As for downloads, Koo has amassed nearly 40 million downloads since its inception, per Sensor Tower data. However, it saw only 9.7 million downloads in the last 12 months and only 1.3 million in the last 30 days.

This comes after the company was in the news earlier this year for laying off nearly 30% of its workforce in April.

“Koo was making efforts to raise a new and sizable round from the beginning of this year but they didn’t materialize. Its existing investors had put $3-4 million in the firm during Feb-March, but are unlikely to come together for a large round,” said one of the sources requesting anonymity.

Sources further added that Koo hasn’t seen meaningful improvement in its revenue and its monthly collection stood at around Rs 25 lakh for the past few months. For background, Koo registered only Rs 14 lakh in revenue during FY22 while its losses stood at nearly Rs 200 crore.

In a response to Entrackr’s specific queries on funding and revenue, Koo’s spokesperson said, “The company is well-capitalized as they raised $10 million earlier this year. We have also introduced creator monetization through our premium creator subscription offerings. All these features and experiments have been launched in the year and show great promise. With the way we have optimized our costs and scaled our revenue, we will be able to achieve operational break even in the next 6 months.”

While the company did not announce the $10 million fundraise, Entrackr had exclusively reported their last funding round of $6 million which kicked off in November 2022, part of the $10 million round.

According to sources, Koo may be forced to weigh M&A options as the funding environment for loss making companies appear bleak. “If a growth stage company like Koo without any solid revenue stream didn’t manage new money, strategic consolidation seems to be a potential outcome in the current situation,” said the person quoted above.

Koo declined to comment on them exploring any merger and acquisition options, but in response to Entrackr regarding a decline in growth, their spokesperson said, “The entire startup ecosystem is going through a recalibration from a growth to a revenue first reality. The pace at which startups were getting funded has slowed down drastically for the entire ecosystem, not just Koo.”

“Such times call for optimizing costs, maximizing revenue and extending runway. We too have moved from a growth engine to a very efficient system that's extremely optimized on marketing, tech and people costs and have focused on maximizing revenue at a unit level, from various innovative models,” the spokesperson added.